M/S ALLIANCE COMMODEAL (P) LTD.,KOLKATA vs. ITO, WARD-9(1), KOLKATA, KOLKATA

This appeal filed by the assessee is directed against the order of Ld. CIT(A) –16, Kolkata dated 17.02.2017 whereby he confirmed the addition of Rs. 3,20,00,000/- made by the AO on account of share application money received by the assessee during the year under consideration by treating the same as unexplained cash credit u/s 68.

The assessee in the present case is a company which is engaged in the business of shares and investment. The return of income for the year under consideration was filed by it on 20.09.2009 declaring a total loss of Rs. 11,525/-. In the assessment originally completed u/s 143(3)/147 vide an order dated 31.12.2010, the total income of the assessee was determined by the AO at Rs. 10,780/-. The said assessment was subsequently set aside by the concerned Ld. CIT by treating the same as erroneous as well as prejudicial to the interest of Assessment Year: 2009-10 M/s. Alliance Commodeal Pvt. Ltd. the revenue on the ground that the requisite enquiries were not made by the AO regarding the identity and creditworthiness of the shareholders who had subscribed to the shares of the assessee company to the tune of Rs. 3,20,00,000/-. The AO accordingly was directed by the Ld. CIT vide an order dated 20.03.2013 passed u/s 263 to make the assessment afresh after conducting thorough and detailed enquiries.

In pursuance of the order passed by the Ld. CIT u/s 263, summons u/s 131 were issued by the AO to the directors of the assessee company. The same however were returned back by the postal authority unserved. Even the notices issued by the AO u/s 142(1) remained uncomplied with by the assessee. The AO, therefore, treated the entire share money of Rs. 3,20,00,000/- received by the assessee during the year under consideration as unexplained cash credits and addition to that extent was made by him to the total income of the assessee u/s 68 in the assessment completed u/s 143(3)/147/263 of the Act vide an order dated 29.03.2014.

Against the order passed by the AO u/s 143/147/263, an appeal was filed by the assessee before the Ld. CIT(A). During the course of appellate proceedings before the Ld. CIT(A), the relevant documentary evidence in the form of copies of the bank accounts, income tax return etc. was filed by the assessee to show the identity and capacity of the concerned shareholders. The Ld. CIT however did not consider the same and confirmed the addition made by the AO u/s 68 on the ground that the genuineness of the transactions remained unproved in the wake of non-compliance of the summons

We have heard the arguments of both the sides and also perused the relevant material available on record. As submitted by the learned counsel for the assessee, various details and documents furnished by the assessee before the AO as well as before the Ld. CIT(A) to establish the identity and capacity of the concerned shareholders as well as the genuineness of the transactions were not considered by them and share money received during the year under consideration was treated by them as unexplained cash credits u/s 68 merely on the ground that the summons issued u/s 131 were not responded to by the directors of the assessee-company. He has contended that the said summons infact were never received by the directors of the assessee-company and they, therefore, could not comply with the same. He has also submitted that specific directions were given by the Ld. CIT in the order passed u/s 263 while setting aside the issue under consideration to the Assessing Officer but the AO did not comply with the said directions fully while completing the fresh assessment vide his order dated 29.03.2014. He has contended that keeping in view all these facts and circumstances, the matter may be sent back to the AO for deciding the same afresh as per the specific directions given by the Ld. CIT in the order u/s 263 after giving the assessee proper and sufficient opportunity to explain the relevant cash credits representing share application money in terms of section 68. Since the learned DR has also not raised any objection for sending the matter back to the Assessing Officer, we set aside the impugned

In the result, the appeal of the assessee is treated as allowed for statistical purpose. Order Pronounced in the Open Court on 22nd March, 2019.